Market Update (February 8)

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Written By: Nayan Bandaru, Junior Analyst, Technology

Stimulus Package Updates

House Democrats continue to push forward with Bidens package amid Republican resistance

The Biden 1.9 trillion Stimulus package seems to be continuing to move forward smoothly even with republicans wanting to allow the benefit for only individuals making 50,000 and families making 100,000. Also, the democrats are buckling down on higher-income individuals and families blocking them from getting any stimulus if they make 100,000 and 200,000 or above (respectively). The new plan also includes a greater child tax credit for millions of American families. For newborn children up to age six, the credit is 3,600 and from ages six - seventeen the credit gets lowered to 3,000 per child. The $15 minimum wage that Biden proposed as part of the package faces long long odds in the senate of being passed. The many aspects of this plan hopefully should be passed within the next few weeks giving the American people some financial relief from the coronavirus which is still rampant throughout the nation.

Cryptocurrency

Bitcoin has a huge surge and Ether continues to climb

Bitcoin rose over 20% today after news that Tesla invested 1.5 billion into the cryptocurrency causing it to blast past its last ATH. Swings like these seem common nowadays in such a volatile market with so much hype around cryptocurrency in the last couple of weeks, but this one may have more merit than just a pump and dump. Bitcoin’s value greatly increased in the past due to its halving periods but now Bitcoin increases have more weight with its true future valuation and how much of a staple it could become in the economy such as gold and silver. When large institutions invest money into bitcoin it shows that the market makers and large-cap have an eye on it and think it has a lot of potential for the future, i.e. there are rumors that Apple wants to invest in Bitcoin. There is also the X-Factor of Elon Musk though. If it were another company that invested in bitcoin would we see the same rise in price? Or is it just the Musk magic? The historic rise of Ether is being fueled mainly by the Defi sector which currently has around 36 billion locked up in it, and also the recent large rises in Bitcoin. Following surges in the two essentially most well-known cryptocurrencies, there are a couple of altcoins that also have an upside according to experts (Cardano and XRP) which may see a rotation soon. Also, my personal favorite crypto, Dogecoin, is up over 1000% on the year. Thanks, Elon!

Earnings Updates

Looking at what's to come this week and beyond

As companies roll out their Q4 2020 earnings there are a couple you’ll want to keep your eye out for this week especially. Disney has earnings this week (Q1 2021) and is set to impress investors. In fact, the stock jumped up over 4% today in light of this and is set to potentially continue the rise. With potential stimulus rolling out giving Americans more disposable income and continuation of coronavirus vaccines it's looking good for Disney. There are also other large-cap companies like Zillow, Uber, Coca-Cola, AstraZeneca, Lyft, Twitter, etc…. So keep your eye on these other stocks as earnings can be a slippery slope for investors.

Technology

Amazon workers attempting to form a union, Apple EV talks fall through

Amazon workers in Bessemer, Alabama are attempting to form a workers union. This specific warehouse opened in March right alongside the beginning of the Coronavirus pandemic. Workers feel as if they are being punished for actions that are not their fault such as not maintaining 6 feet of distance when there is not enough space to do so. They are also saying the management is extremely poor with large gaps of communication that are not helping the situation at all. If the union does pass it will be the first of its kind for amazon and be a catalyst for other employees around the nation for organizing unions. Amazon ran into something like this in 2014 but the employee’s efforts back then went nowhere. Amazon feels like this viewpoint is not representative of the majority of the workers and is making attempts to send out flyers and dissuade voting for the union. Apple’s Project Titan (its autonomous electric vehicle) was in talks with Hyundai and Kia. They were said to be close to a deal in which Hyundai would provide the foundation for the electric vehicle but recently it has been said that the companies are in a paused status on the deal. Apple may keep these talks with Hyundai continuing under the table but nothing is certain as Hyundai says Apple is in talks with many global vehicle companies at the moment.

Rise in the Dollar

The value of the Dollar is rising, and why it actually might be good for stocks

Usually, when the dollar is rising in value it reflects that global investors have a bearish outlook on the equity market as a whole and are moving their money into more safe-haven assets like currencies. However, the strength of the dollar this time around is an indication that the United States Economy has a highly positive outlook relative to other countries around the world in the long term as countries open back up from the pandemic. Interest Rates are also said to rise faster than other countries in the United States which makes investing in the dollar more appealing. As the dollar strengthens it seems to be a case of positive economic outlook rather than risk-averse global trades being bearish on the global equity economy.

Video Games

EA entering the world of mobile gaming, and Reddit’s New valuation

The popular video game publisher Electronic Arts just announced that they are going to acquire the mobile video game publisher Glu Mobile for 2.4 billion. This news comes a couple of weeks after EA outbid Take-Two Interactive software for racing game maker Codemasters Software. EA believes that the future is mobile gaming and these two acquisitions back that claim up. The acquisition greatly expands EA’s mobile gaming presence as it seeks to take market share away from Activision as it acquired the popular mobile-video game maker King back in 2016, the maker of candy crush. Reddit also just raised 250 million in a new funding round that doubles their valuation up to 6 billion. Reddit Ceo says they plan to spend that money on advertisements, consumer products, and video.